I don’t have unlimited reserves of cash to invest in UK shares. But here are two dirt-cheap stocks I’d happily buy to hold until the end of the decade.
Ten Entertainment Group
Businesses selling non-essential goods and services remain in danger as the cost-of-living crisis endures. Persistently high inflation could see profits disappoint towards the end of 2023 and into next year.
Yet the resilience of the leisure sector suggests to me there could be some gems here to invest in. One such company on my radar today is ten-pin bowling operator Ten Entertainment Group (LSE:TEG).
The business owns 49 bowling centres across the UK. And despite tough conditions for consumers, its performance continues to impress.
Sales in 2022 hit the higher end of expectations as it admitted 8m people through its doors. And despite tough comparatives it has continued to grow revenues. Like-for-like sales were up 2.7% in the first 10 weeks of the new calendar year, latest financials showed.
Fresh trading numbers from Ten’s industry rival Hollywood Bowl further underline the healthy state of the bowling market. This week it announced revenues of £111.1m in the six months to March, up 10.9% year on year. This represented record half-year sales for the company.
People’s love of ten-pin bowling continues to strengthen. It’s a cheap and fun night out and is a market that has plenty of room for further growth. And this UK share has an ambitious expansion strategy to make the most of this opportunity. It plans to open four new centres this year alone.
Ten Entertainment’s share price has risen an impressive 13% since the start of 2023. And the cheapness of its stock provides scope for further gains. Today the business trades on a forward price-to-earnings (P/E) ratio of 8.9 times.
The PRS REIT
Real estate investment trust (REIT) The PRS REIT (LSE:PRSR) is another great UK value share on my radar. In fact the business — a major player in the private rented accommodation sector — offers a blend of low earnings multiples and big dividend yields.
For this financial year, PRS trades on a price-to-earnings growth (PEG) ratio of 0.7. This is well inside the bargain benchmark of one and below.
Meanwhile, the firm’s prospective dividend yield sits at a healthy 4.8%. It is able to offer such big yields due to REIT rules that require these shares to pay at least 90% of annual rental profits out in the form of dividends.
Due to a shortfall of available properties, residential rents in the UK are booming. Its a theme that pushed like-for-like rental income at PRS up 5.7% in the three months to March. And its one that looks set to continue as demand growth outstrips supply.
The REIT is expanding rapidly to make the most of this opportunity, too. Indeed it has just finished construction on its 5,000th home. Rising building costs are a problem here but on balance I still think it’s a great share to own right now.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
